Question 19 1 pts Jake the Dog Inc. is investing in a new portable iguana...

90.2K

Verified Solution

Question

Finance

image
Question 19 1 pts Jake the Dog Inc. is investing in a new portable iguana killing machine that will cost $310,000. The machine has a useful life of 6 years and falls into the 5-year property class for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20%. (2) 32%, (3) 19.2%. (4) 11.52%, (5) 11.52%, 46) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for $50.000 at the end of the 6-year period. Jake's corporate tax rate is 32%. In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 70,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.75 (its Jake! he is a risky dog-dude!!), the expected market return is 12% and the risk-free rate is 5%. Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What are the depreciation expenses for the machine for years 1 through 6 do not include taxes here)? 0-$34,330, 54,440. 33.820. 15,450. 15.450, 78.436 $31.332 30.776. 18,928. 18.964 11520.11520 $42.000, 67.200, 40,320. 24.192, 24,192, 12,096 0.533,333, 33,333. 33,333 33.333.33.333. 33.333 $62,000.99 200. 59.520.35,712, 35.712, 17.856

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students